]]>When Google acquired home automation company Nest Labs in January, more than a few people wondered how consumers would react. After all, the search giant is best known for sucking up every piece of information it can get its hands on — would anyone trust it to control their thermostat, light switches and other pieces of their domestic lives?

According to Nest CEO Tony Fadell, who spoke Wednesday at Gigaom’s Roadmap event in San Francisco, the transition has gone smoothly — in part because Google has allowed Nest to make decisions based on emotion or “EQ” rather than just the pure “IQ” of data points.

“As soon as you turn the decision over to the data, you start to lose your own gut,” said Fadell, who added that Google has become a more emotional company of late, a shift that he says is reflected in things like the material design of Android.

Fadell added that the biggest life change under Google has been the imposition of the company’s “OKR’s,” a quarterly system that requires teams to set Objectives and Key Results (he says the system is perhaps most important for defining what he is not going to do at a given time).

Google ownership has also meant acquisitions like Dropcam, and a marketing budget that has let Nest launch a series of TV commercials to promote the promise — and acknowledge the creepiness — of an internet-connected smart home. Oh, and apparently it’s not a “smart home” anymore. Fadell said his preferred parlance is now “the conscious home.”

You can get hear more about Nest’s experiences as a Google company, plus some wisdom from Om and Fadell on design culture and whether smartwatches will ever catch on, in the video below.

]]>A wide variety of companies are seeking to capitalize on the huge potential of the smart home space. Vendors and buyers must be aware of key disruptors that will shake up the market in coming years.

]]>The increasing pressure on device manufacturers to make their products smart and connected is spurring an entire industry devoted to helping manufacturers add hardware connectivity and back-end services.

]]>Google announced on Monday that it’s in the process of acquiring Nest Labs, a home-automation company known for its digital thermostats and smoke alarms. The proposed purchase for $3.2 billion, which is to close in coming months, will give the Silicon Valley giant one of the hottest names in energy-management technology and product design, and comes at a time when Google is also expanding its presence in robotics, energy and internet-of-things (IoT) technology.

Nest’s mission is to reinvent unloved but important devices in the home such as thermostats and smoke alarms. Since its launch in 2011, the Nest Learning Thermostat has been a consistent best seller–and the recently launched Protect (Smoke + CO Alarm) has had rave reviews.

Larry Page, CEO of Google, said: “Nest’s founders, Tony Fadell and Matt Rogers, … [are] already delivering amazing products you can buy right now–thermostats that save energy and smoke/CO alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries..”

The release added that Nest would retain its own brand identify, and that it would continue to operate under the leadership of Nest CEO Tony Fadell (you can see a video of Fadell speaking at Gigaom’s recent Roadmap conference below).

In its own blog post, Nest described the deal as “coming home” noting that “Google has been in the mix in some way or another for about three years of our almost four-year history.”

Fadell said he is “thrilled” to join Google in the blog posts, but has also suggested he is attuned to the data implications of Nest — which collects information about consumers’ domestic activities — being rolled into Google’s giant data collection.

“Our privacy policy clearly limits the use of customer information to providing and improving Nest’s products and services. We’ve always taken privacy seriously and this will not change,” Fadell stated in a message to TechCrunch.

For Nest, the Google takeover will provide it with protection from larger competitors like Honeywell who have been attacking the startup with patent lawsuits. It also gives the company the financial means to continue scaling; as my colleague Katie Fehrenbacher reported in early January, Nest was on the hunt for more funding to launch new products and weather the lawsuits.

The Nest acquisition isn’t the first time Google has dabbled in the internet of things space: The company announced an ambitious initiative dubbed Android @Home at its Google I/O developer conference in 2011, at the time saying that it wanted to launch internet-connected light bulbs in cooperation with Lighting Science. However, those products never saw the light of day. Still, there has been chatter that Google has continued to invest in the connected home space, and judging from Linkedin profiles, it looks like the Android @Home initiative is alive and well within Google.

Google, which requires a huge amount of power to keep its servers running, has long had an interest in energy efficiency. And, as we reported last fall, the company has been quietly experimenting with a smart thermostat project called EnergySense.

The Nest acquisition also comes on the heels of Google’s acquisition of robot-maker Boston Dynamics, and after Google Ventures poured $258 million into ride-sharing service Uber last year.

]]>Smart home startup Nest has been using design to reinvent unloved products like the hated smoke detector and neglected thermostat. It’s no small feat and turns out it needs a lot of funding to do so, including scaling a consumer electronics business, launching in new sectors and fighting off the unhappy incumbents.

Just a year and a half after raising around $80 million, Nest Labs is reportedly working on closing some $150 million in funding (or as high as $200 million) led by Yuri Milner’s investment firm DST, according to Re/code. The valuation of the round could be between $2 billion and $3 billion, which would mean that Nest’s valuation has about tripled from the $800 million valuation I heard for the company’s last round.

If this reported round closes, Nest could have raised between $230 million and $280 million from just these last two rounds, with a possible another $50 million to $80 million raised before launch. I know it raised at least “tens of millions” before it launched. Nest doesn’t comment on funding so it’s hard to tell how much it has amassed since its founding, but I would guess, with this funding, it will have at least gotten over the $300 million mark.

That’s a decent chunk of change for a company that officially launched only a little over two years ago. Re/code said other investors were vying for the deal but that Yuri Milner’s firm DST clinched it, and the round will include current investors Venrock, Google Ventures, Generation, Lightspeed, and Shasta.

Nest needs a lot of money to scale its current businesses, to launch new products, and also to fight lawsuits that have cropped up. Nest was hit with another (its second) patent lawsuit in November from BRK, which makes the First Alert smoke detector. The first was from thermostat maker Honeywell.

Part of the funding no doubt will go to scaling its current products. I’ve heard that Nest has been growing its thermostat business quite nicely. A year ago I reported that the company was shipping 40,000 to 50,000 of its learning thermostats per month. If its valuation has tripled since its last funding, its thermostat business has done well.

But when it comes to the Protect smoke detector product, it’s unclear how much of a hit that device has been. The price point is rather high ($129) for a smoke detector, and the reviews have been less enthusiastic than they were for the thermostat. Nest might need to invest more heavily in actively marketing and building distribution for the smoke detector, beyond the strong word of mouth and buzz it partly relied on for the thermostat. I’ve asked Nest for more details on shipment and sales numbers for its smoke detector product, and I will include those if I learn more.

Since Nest is reinventing older products based on smart design (the thermostat and the smoke detector), the company could end up falling into a sort of hits-oriented business model. One product could be a big hit, while another doesn’t touch a nerve and make that emotional connection that they need. Nest CEO Tony Fadell spoke with Om at our recent Roadmap conference about the power of design to reinvent these older products.

Nest also will likely launch new products beyond the thermostat and the smoke detector in the future. Researching, creating, launching, marketing and scaling those new products quickly will all require more funds.

With the launch of the smoke detector, Nest seems to have moved beyond working just on green products. It’s clearly aiming to be a large consumer electronics company built in the vein of Apple but for a next-generation of connected devices. To get there — or even to compete with Apple — Nest needs to be big. And it needs funds to get there.

]]>A company that’s been making smoke detectors for fifty years has filed a lawsuit against startup Nest Labs claiming patent infringement over aspects of Nest’s new Protect smoke detector. I’ve embedded the lawsuit below, and I first read it on The Verge. Turns out when a startup is trying to reinvent decades-old, unloved products with design, they tend to step on the toes of the decades-old companies already there.

BRK, which makes the First Alert branded smoke detectors, is alleging that Nest’s Protect device violates its patents for a talking smoke detector that explains the location of the incident. BRK says it has spent considerable time and resources developing this tech and marketing it, and they want the court to stop Nest from selling the allegedly infringing detector and to award damages.

Nest was also sued by Honeywell back when it launched its learning thermostat. As a result of the Honeywell lawsuit Nest hired Apple’s former Chief Intellectual Property Officer Richard “Chip” Lutton as its new vice president and general counsel.

Nest responded to the lawsuit with the official comment:

This is an all-too-common defensive response from an entrenched industry incumbent. In this case, it’s particularly troubling that BRK/ First Alert want to prevent consumers from benefitting from an improved safety-related device. But we are fully prepared to fight this unfounded lawsuit vigorously in court. In the meantime, we’ll continue to reinvent unloved products to improve people’s lives.

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Updated at 9:33PM on November 19 to include an official comment from Nest.

]]>Today a broad range of smart-home services is being marketed to consumers like never before. But if growth in awareness is to lead to a truly mass-market phenomenon, the connected consumer needs solutions that are both affordable and compelling.

]]>Can Nest do what it’s done with the thermostat — reinvent it with wireless tech, smart algorithms and great design — for another unloved product: the hated smoke detector? On Tuesday the startup, founded by former Apple employees including iPhone and iPod designer Tony Fadell, announced that it will soon start selling “Nest Protect,” a well-designed smoke and carbon monoxide alarm.

Reports surfaced late last month that Nest would soon launch a smoke detector (first reported by former Wall Street Journal technology reporter Jessica Lessin). But this is the first time that Nest is talking publicly about the product and giving details about it.

The device has a variety of sensors and wireless connections and a new type of interface that creates a smoke detector more befitting to the iPhone demographic (Fadell will talk more about the design and creative inspiration at our experience design conference RoadMap next month in San Francisco).

While a smoke detector is an unusual move, I can see why the team would want to take on the neglected device as its second product. Most people down right hate their smoke detectors. I’ll readily admit to knocking down more than one of these ugly gadgets off the ceiling with a broom after it wouldn’t stop its low-battery incessant chirping. Bad design and poor user experience mean that a lot of households aren’t able to effectively use a device which could one day save their lives.

Nest Protect

The Nest Protect device has six sensors — smoke, carbon monoxide, heat, light, activity, and ultrasonic — a WiFi connection, and a ZigBee-like wireless connection, which all make the gadget much smarter than the barebones smoke detectors out there currently. While a traditional smoke detector is binary of sorts — in alarm mode or totally quiet — Nest Protect has a variety of states in between and new ways to communicate with the user.

If the Nest Protect detects increased smoke or carbon monoxide levels it can alert the residents with both audio and a color code on the ring on its face. The resident can then look to see if there is an emergency situation, and if there’s not then the user can use a hand wave gesture — activated by the activity sensor — to dismiss the heightened alert state. There’s also a big ol’ button in the middle that can be pressed to stop the heightened state.

The Nest Protect also remembers which room it’s in and if there is smoke or carbon monoxide detected it can tell what room the problem is coming from. Particularly if there are multiple Protects installed throughout a house.

The user interface is also much more sophisticated than basic smoke detectors. The ring in the center — reminiscent of the ring used by Nest’s thermostat — can glow green when everything’s fine, yellow during the heightened state (or when the batteries are getting low), and red when there’s an emergency.

The light sensor detects when the lights are on or off in a room and when the lights are off the activity sensor can be used to passively light up a room with a warm glow when someone walks by. The frustrating issue with the low battery chirping in basic thermostats is also partially solved because when the battery is low in Protect, the heightened alert state and audio voice will tell the resident a variety of times as the battery gets lower and lower. It also tells the user via a mobile app. Though the battery will last multiple years.

Nest Protect also uses a proprietary form of the 802.15.4 wireless connection (the one that ZigBee is also based on) to connect multiple Nest Protects throughout a house, so that when a user interacts with one of the devices, the other Protects know what’s going on. The Protect can also use this wireless connection to talk to the Nest thermostat. If you’ve got ‘em both, then bam, your house has started to get straight up Nestified.

And of course, with the cell phone as the standard interface to the home these days, Nest Protect can be controlled with a mobile app or via a website. That means some interesting connections between the device and the app, like the ability to see a heightened state or emergency remotely, and a mobile app that can offer emergency numbers and suggestions during an emergency.

Nest Protect is undoubtedly a superior product to other smoke detectors on the market. But will homeowners be willing to spend $129 on a smoke detector, when basic ones cost $20 to $30? Well, Nest certainly proved the market is there for a hip thermostat, though smoke detectors are an entirely new industry and asset.

Nest is taking reservations for the smoke detector now, and they plan to start selling and delivering the device in early November.

Future of Nest

I admit I was surprised to hear that Nest will be tackling the ugly smoke detector. I thought they’d either go deeper into energy or do an even more consumer product for the digital living room. But I do like how Nest only wants to focus on underserved markets. How many more of these long ignored home devices are there — the garage door opener or the door key itself?

Nest execs told me that Fadell envisioned the smoke detector product focus after he was in bed late at night and was perplexed by a flashing LED light on his home’s smoke detector. Nest has been working on the device for at least 18 months.

Nest has morphed into a decidedly large company at this point thanks to the growing sales of their thermostats and their large rounds of venture capital funding. They have 270 employees, they hired a CFO from Tesla about 9 months ago, as well as a VP of Marketing from Levi’s recently, too. The company says they have 5,200 points of sale, 10,000 certified installers, and are selling in online and offline stores like Amazon, Apple, Best Buy, The Home Depot and Nest.com.

This article was updated at 1:23PM PST on October 8th to reflect that the wireless connection that connects multiple Nest Protects together is based on 802.15.4, which is the standard that ZigBee is based on, but the connection itself is not ZigBee.

]]>Learning thermostat startup Nest Labs launched a developer program and a web API on Wednesday. The company made the comments at the CEDIA Expo 2013, and the news follows the reports earlier this week that Nest plans to launch a smoke detector.

]]>Nest Labs, a startup that makes energy efficient thermostats, will license patents from the portfolio of Intellectual Ventures in a move that may help stave off a lawsuit from thermostat giant Honeywell.

In a deal announced on Wednesday, Intellectual Ventures said it is giving Nest non-exclusive access to its patents, including those related to the “automatic registration of devices.” Nest’s general counsel explained the deal as follows:

“To date, we’ve filed almost 200 U.S. and international patent applications and we have hand-picked and acquired more in key areas, including the patents acquired from Intellectual Ventures. Our patents allow us to defend our innovative products in the market.”

The statement did not explain if Nest is paying money or is instead giving Intellectual Ventures equity in exchange for the patent license. Update: It also did not say if the deal includes provisions that allow Nest or Intellectual Ventures to assert the patents (h/t to keninca in the comments).

In the bigger picture, the deal could be bad news for startups and the innovation economy because it confers resources and, possibly, more legitimacy, to Intellectual Ventures. The Seattle company, run by former Microsoft executive Nathan Myhrvold, does little actual inventing, but instead amasses old patents in order to file lawsuits and demand licensing fees from thousands of productive companies — a practice known as patent trolling. Intellectual Ventures is in the midst of raising another $3 billion to expand its trolling activities.

The Nest and Intellectual Ventures arrangement is the second deal between a startup and a patent troll to make the news this week. Earlier, Wired reported how a glasses startup had turned to the notorious troll lawyer Eric Spangenberg, who makes $25 million a year and likes to “go thug,” to protect itself from a questionable lawsuit.

The overall result of the deals between trolls and startups is that money that could flow to research or hiring instead gets channelled into dead weight costs of litigation and administration.